To Tell or Not To Tell: Should Your Customer Know It’s A Used Diamond?

Thanks to advances in technology, we jewelers are now able to offer increasingly beautiful-appearing gems. Myriad treatments make some of the most ordinary-looking stones appear special to the naive consumer. To ensure our customers are not taken advantage of, however, stringent laws require us to disclose these treatments. Similarly, if we appraise an item we know to be treated or altered in any way, it’s our legal and ethical obligation to disclose that fact.

But what about previously owned stones?

Assume a customer comes into your store wanting to sell her 1.25-ct. diamond ring, the last vestige of her recently broken marriage. After a bitter divorce, she wants to get on with a new life. Ridding herself of the ring will bring closure to the past. Besides, she instinctively feels the ring brought her bad luck with her first marriage, and she doesn’t want it around to harm the next one. With a new mounting, this diamond will be in perfect condition. No one need ever know it once was owned and worn by someone else.

You discuss the terms of sale and finally make a cash offer based on your need for it, your cash flow and its value in the marketplace. Its actual value to you may be substantially less than wholesale, especially if you don’t need the stone for inventory. Having cash tied up in something you don’t need actually costs more than the original purchase price. Nonetheless, you buy the diamond and put it in your inventory to be resold.

To tell or not to tell? After several weeks, a couple walk into your store and describe the size, price and quality of diamond they want to buy. The previously owned diamond fits the bill perfectly. You’ve already mounted it and it looks gorgeous. The couple ooh and aah over the ring. You smile and look proud.

As they take out their charge card, they casually ask about any certificates that might go along with the stone, authenticating size and quality. Of course, you say, you have those. Fortunately (or unfortunately), they never ask about prior ownership. Do you raise the issue?

You may have no qualms about being totally forthcoming with customers about treatments. But you wonder why it’s important to disclose a diamond’s prior ownership. After all, everybody knows there’s no such thing as a “new” diamond. Each stone was made millions of years ago and has changed hands many times on its way to your store. And unlike a used car, which shows wear and tear and has a certain and short life span, a diamond is literally forever.

So if a diamond lasts forever, what’s the problem selling it as new? Why make any big fuss over prior ownership?

The diamond as symbol: The problem is that diamonds have come to symbolize love, commitment and special occasions. Almost every diamond engagement ring worn by someone else has its own story. Emotion and deep feeling are far more likely to be attached to it than to other types of jewelry. It’s a family heirloom, a mark of achievement or the beginning of a lifelong relationship. While insurance companies don’t insure “sentimental” value, nearly every diamond has it.

So once again the question: if a customer asks where the diamond came from and you know it was once owned by someone else, what are you obliged to answer?

Perhaps the policy in my store may interest you. We bend over backward to provide full disclosure at all times. To ensure that our “estate” and regular diamonds never get mixed together, we keep them in different locations and mark them separately.

It’s true some people could care less where their diamond comes from as long as it’s the size, color and price category that works for them. Many others, however, don’t want a diamond that belonged to someone who has died or who suffered through an unhappy marriage.

Is Nicole Simpson’s diamond any different from another one of the same quality? Would you want her ring to symbolize your commitment? Whatever your opinion, I believe as a professional jeweler that my customers have a right to know if their diamonds had previous owners.

Full disclosure laws already affect many other professions. Real estate brokers, car dealerships and many other industries are obliged to provide their customers with information affecting the history of the product &endash; even if it’s not immediately obvious. As reputable, ethical jewelers, it’s incumbent on us &endash; with or without laws coercing us &endash; to provide customers with complete and honest information at all times. This applies to diamonds also &endash; “new” or “used!”

The author owns Susan Eisen Fine Jewelry in El Paso, Tex.